Because economies (for example, regional economies, national economies, global economies, and cross-sections thereof) can be very complicated, economists tend to be interested in generating economic indicators that help quantify and/or predict behaviors of the economies. Employment is one such economic indicator. Employment is typically measured as the percentage of the eligible workforce seeking employment that is actually employed. Employment is often measured by its opposite, unemployment, meaning the percentage of the eligible workforce seeking employment that is not actually employed.
High unemployment may indicate a struggling economy, and low unemployment may indicate a thriving economy. However, because the unemployment rate is based on eligible workers who are seeking employment, if fewer workers are seeking employment, it is possible for an economy to lose jobs even as unemployment decreases. Further, an individual worker may be employed in two or more positions. For example, the worker may have a full-time job and a part-time job, two full-time jobs, two part-time jobs, etc.
Employment statistics may be determined in one or more of the following ways. First, employment surveys may be issued to eligible workers, and the workers' replies may be used to determine the current unemployment rate. For example, in the United States of America (US), the US Census Bureau routinely issues surveys to samples of the population to determine information including, but not limited to, employment statistics. The accuracy of statistics derived from such surveys is highly dependent on the representative quality of the surveys and the accuracy of the workers' replies. Workers do not always truthfully report their employment status, especially if they have untaxed sources of income.
Second, employment statistics may be determined based on workers' claims for unemployment benefits. Typically, a change in claims from one month to the next is considered indicative of the directional growth of the employment market. For example, if more people claim unemployment in March than in February, unemployment may be rising. However, if a worker stops claiming unemployment, this method cannot determine whether the worker has found work or has simply given up looking for work. Thus, especially in long-term employment shortages, decreasing unemployment claims may not accurately reflect an increase in the employment market.
Third, employers may periodically report the number of employees on its payrolls. When the payroll numbers from multiple employers are combined, a change in total payroll numbers from one month to the next may indicate an increase or decrease in total employment. However, as noted above, workers may receive untaxed sources of income. Thus, a worker may leave a business and continue earning income without being counted in any official payroll numbers.
In some cases, employment/unemployment statistics are based on a combination of one or more of the factors described above. For example, a local, state, or national government may examine the aforementioned factors and issue a reasoned estimate of the current unemployment rate. Such estimates are often revised upward or downward as new information becomes available.